Opinion
Mark Suster argues Series A is VC's most overvalued funding round
“And so I think that a round is the single most overvalued round in venture capital.”
Insight
Suster: Seed funds take 15 years to yield most profits
“A seed fund has a 10 to 12 year maturity, and it's really more like 15 years, and that's just the truth about venture capital. It takes longer for your fund to mature, and you might return your fund in year seven, eight, or nine, but you're yielding most of th…”
Opinion
Mark Suster calls Anduril the most important private company besides SpaceX
“So you look recently at Anduril, probably the most important company In the private markets behind SpaceX.”
Insight
Suster: Going public without analyst coverage and institutional support is worse than staying private
“Going public, if you don't have coverage, and you don't have an institutional base that wants to invest in you, like, is worse than being private. Because you now have a fixed market cap that doesn't go up. You don't really have liquidity.”
Prediction Not checkable as stated
Mark Suster predicts mega tech M&A remains dead regardless of elections
“The FTC has not been looking too kindly on these mega deals. And so I think the mega deals just aren't going to happen for a period of time. I don't know what will happen post November, but even either administration, I'm not convinced they're suddenly going t…”
Opinion
Suster: Defense tech startups like Anduril are critical for future warfare
“I would argue that's why companies like Anduril are so important, because the future battleground are going to require a new type of weapon, a new type of defense system, that if we don't develop it, the Russians will, the Chinese will, the Koreans will, and I…”
Assertion Contradicted
Suster: 25% of VC funds deployed their entire fund in 2021
“25% of all funds deployed their entire fund in twenty-twenty-one. 25%, one in four. The median time to deploy in twenty-twenty-one was 1.7 years, okay?”
Insight
Suster: Roughly six deals drive 80% of returns in a venture fund
“Empirically, about six deals in any fund drive 80% of the returns.”
Opinion
Suster: There are too many cheerleader VCs
“I think there are too many cheerleader VCs.”
Insight
Suster: Investor advice from non-operators is often not actionable
“You often get input from investors who have never done what you've done before. And so it's like, well, meaning smart people saying smart things, but it's not actionable.”
Opinion
Suster: Pure software-only VC investing strategy is not realistic for the future
“So, I think VCs just got a little too comfortable that every investment they were gonna do was software only, and I just don't think that's realistic for the future.”
Assertion Supported
Suster says 20-percent growth software startups currently trade at 4x revenue
“But the twenty-year average is six X. And right now, if you're growing at 20%, you're probably trading at Forex.”
Insight
Suster: Disciplined valuations leave startups a much larger pool of potential acquirers
“There's a ton of companies that can acquire businesses for 100 to five hundred million dollars. There's not so many who can acquire it for two billion or five billion. So if you're disciplined as an investor, if you're disciplined as a founder, and you're fund…”
Opinion
Suster: Tech entrepreneurs in 2024 are more patriotic than ever before
“I think entrepreneurs
In 20, 24 are way more patriotic than they've ever been. And, you know, there's sort of a pride in helping America and capitalism.”
Insight
Suster: Most tech markets are winner-take-most with weak returns for third place
“Most markets are winner take most. Number one takes the majority. Number two takes the rest. And number three is a set of steak knives. And If you back three, four or five, you're just not going to make a lot of money. You need extreme success in the category.”
Assertion Partly supported
Suster: Series A/B capital grew 9x from 2010 to 2022
“The market for A and B between 2010 and 2022 went up by nine X. So nine times more capital in those markets than in any other sector of the market. And as a result, valuations went up like 300%.”
Insight
Suster: A VC's job is to be a sparring partner, not the decider
“I view it as our job to like be a sparring partner and it's lonely being CEO. I was CEO twice is very lonely and you don't get a lot of advice. And when you get advice, most of it is not applicable. And so I view it as our job to have an opinion and to state t…”
Insight
Mark Suster says VCs must time trends for five-year horizons
“So it's our job to invest in something that we believe is going to happen in five years and being correct. If it's going to happen in a year, you probably missed the trend and there's probably 10 other VCs that were investing four years ago. And if you invest …”
Insight
Suster: Hardware anchoring significantly increases consumer willingness to pay subscription fees
“If I tried to sell you a product on your iPhone, download it and pay 20 dollars a month, It's so hard to get someone to pay 20 dollars a month for anything on their iPhone. If I sell you a 200 dollar piece of hardware, but then you need a 20 dollar a month sub…”
Assertion Supported
Mark Suster notes 2021 software multiples hit 25x against historical 10x
“So, people were paying in twenty-twenty-one 25 times next 12 month revenue, ok? Over the last 10 years, they were paying just under 10 times.”
Mark Suster